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CPCU 552, CP&L FINAL EXAM | ALL QUESTIONS
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Which of the following is not considered a compensatory damage? A Medical Expenses B Punitive Damage C Pain and Suffering D Lost of earnings ---------CORRECT ANSWER-----------------Answer: B Punitive Damages. A and D fall under special damages and C falls under general damages which both fall under compensatory damages. Which of the following options applies to the policy limit that states, "$15,000 Damages to Premises You Rent"? i. Coverage A ii. Coverage B iii. Coverage C a. Options i and ii b. Options i, ii, and iii c. Just option i d. Just option iii ---------CORRECT ANSWER-----------------The correct answer is C, or just option i, which is Coverage A. Damages to premises you rent falls under Coverage A as related to Fire Legal Liability. The $15,000 limit to these damages is the maximum amount the insurance company will pay for any single hostile fire resulting in liability. Which business would not be recommended to have an endorsement concerning liquor liability to their CGL policy? A liquor store in Athens, GA that "checks" ID's A local restaurant where customers can bring their own beer to drink with their meal
An upscale restaurant that sells wine during dinner An accounting firm that provides a happy hour with an open bar for its employees after busy tax seasons A business that delivers margarita pitchers to homes of 21+ year-old customers ---------CORRECT ANSWER-----------------D Two forklifts ALMOST collide, but don't. After a discussion between the concerned drivers and their manager, the group determined the root cause of this problem was that the area of the warehouse was poorly marked for their mobile equipment use. This process is categorized under which Risk Control term: A. Risk Avoidance B. Claims Management C. Loss Reduction D. Loss Prevention ---------CORRECT ANSWER-----------------B Alejandro was recently appointed to the Board of a medium-sized clothing manufacturing company. As he grew more acquainted with his company and after doing some digging, Alejandro was struck by a few red-flags concerning malpractice and exploitation potentially having been committed by upper-level management as well as certain board members. Alejandro is disgusted and hopes to soon discontinue his relationship with the firm. Meanwhile, however, Alejandro wants to protect himself legally in the event that employees or others sue the board members. Which coverage should Alejandro acquire? A. Employment-Related Practices Liability Insurance B. Business Enhanced Expansion Endorsement C. Directors and Officers Liability Insurance D. Worker's Compensation Insurance ---------CORRECT ANSWER----------- ------C. ) Directors and Officers Liability insurance is provided specifically for such a scenario for Board members of a firm. This coverage is intended to protect individuals from personal losses if they are sued as a result of serving as a director or an officer of a given organization or business.
In a standard, non-endorsed CGL policy which scenario(s) are included in Coverage A? Marty used an advertising campaign to bash a competitor's company Rick visits Marty's company and gets injured while walking around the facility Rick visits Marty's company and has his phone broken in a machine by accident I only I and III I, II, III II, III ---------CORRECT ANSWER-----------------Answer d Because "I" is apart of Coverage B this would not be covered in coverage A. II and III are BI and PD, so they would be covered under coverage A. When considering risk control measures to protect against loss exposure, legal duties imposed on organizations are continuously changing, and they are an important factor that risk management professionals need to consider. Which laws develop out of court decisions in particular cases that establish precedent for future cases, helping determine legal duties? A) Tort Law B) Statutory Law C) Common Law D) Plaintiff Liability Law E) Tenent Law ---------CORRECT ANSWER-----------------Correct Answer C) Common Law Which of the following is the distinguishing element of workers compensation and employers liability compared to commercial general liability? A) Injured person involved (employee) B) Statutory Workers Compensation
C) No-fault coverage D) Premise liability E) A, B, and C ---------CORRECT ANSWER-----------------E The phrase "Commerical General Liability" is used to refer to the legal liability of a business arising from. What does commercial general liability insurance cover? A. slips and falls on the premises B. completed operations C.Personal and advertising injury D. Damage to premises rented to you E. All of them ---------CORRECT ANSWER-----------------Correct Answer: E. In 2002, Philip Morris, the number one cigarette producer at the time, was sued by Betty Bullock, a woman who claimed that her lung cancer was the result of smoking cigarettes. Furthermore, she argued that her tobacco addiction was caused by Philip Morris's failure to warn her of the risks of smoking. The company was ordered to pay punitive damages of $28 billion, $750,000 in economic damages, and $100,000 for pain and suffering. How much of this award would Philip Morris's insurer pay? (for the purpose of this problem, assume the limit for Part A of Philip Morris's CGL policy is $30 billion) A. $28,000,850, B. $30 billion C. $850, D. $28,000,750, E. The insurance company will only cover the defense costs in this case because Philip Morris was found to be negligent. ---------CORRECT ANSWER-----------------The answer for this question is C. $850,000. I. An insurer has the right and duty to defend the insured against any suit that seeks damages for bodily injury or property damage to which the insurance applies
Which one of the following statements about the general aggregate limit under a Commercial General Liability (CGL) Coverage Form is true? --------
- CORRECT ANSWER-----------------It is reduced by an claims paid for medical payments under Coverage C. Tom often runs errands for his boss at XYZ Company, using the boss' car. On one of these errands, Tom is involved in a serious auto accident. He spends a couple of weeks in the hospital; misses four weeks of work; and must undergo physical therapy. Does XYZ's Workers Compensation and Employers Liability Insurance (WC&EL) Policy cover Tom's injuries, lost income, and rehabilitation expenses? ---------CORRECT ANSWER------------ -----Yes, the workers compensation policy would pay all of Tom's expenses, because his injuries arose out of his employment at XYZ Company. Aircraft have a significant exposure to catastrophe losses. Of the many reasons for the catastrophic loss potential of aircraft, the most significant is ---------CORRECT ANSWER-----------------The physical properties of aircraft. A security guard is employed at a pier where shipping containers are loaded and unloaded from barges. There is also a small marina for pleasure craft at the pier. The security guard trips over equipment left on a dock alongside a pleasure craft and is injured. The pier only has insurance coverage that provides benefits under the Longshore and Harbor Workers Compensation Act (LHWCA). Is the guard's injury covered under LHWCA? ---------CORRECT ANSWER-----------------The injury is covered by LHWCA because the guard is not covered under a state's workers compensation law. ABC Plumbing entered into a contract with Bill to install a commercial grade septic system on his property. The installation of the septic septic was time sensitive because the rest of Bill's construction project could not go forward until the septic system was in place. The contract required that the work be
done within 30 days of contract signing, or ABC would have to pay a penalty of $1,000 per day. Which one of the following categories of damages does the $1,000 per day penalty specified in the contract fall into? ---------CORRECT ANSWER-----------------Liquidated damages Many states have funds from which employers may purchase workers compensation insurance. Such funds may be either ---------CORRECT ANSWER-----------------Competitive or monopolistic Section II—Who Is an Insured identifies the persons and organizations that qualify as insureds under the Commercial General Liability (CGL) Coverage Form. Which one of the following statements regarding who is considered an insured is most accurate? ---------CORRECT ANSWER------- ----------When a CGL policy covers one or more individuals as named insureds, any person or organization having proper temporary custody of the named insured's property following the named insured's death is an insured. What is the name given to a claim by an employee who says that he or she was fired because of the filing of a workers compensation claim? --------- CORRECT ANSWER-----------------Retaliation claim Javier's business auto policy contains a personal injury protection (PIP) endorsement. He is involved in an auto accident in the covered auto, resulting in $30,000 in property damage, $5,000 in third-party bodily injury, and $10,000 in personal medical expenses. If Javier's business auto policy has a general aggregate limit of $100,000 and a PIP limit of $15,000 and he is at fault for the accident, how much will his insurer pay under the PIP coverage ---------CORRECT ANSWER-----------------PIP provides first-party benefits for medical expenses, loss of income, loss of services, and funeral expenses resulting from bodily injury to occupants of a covered auto because of an auto accident. It pays regardless of which party was at fault
employees are not insured while using their own autos in the named insured's business. ABC Corporation is insured under a standard unendorsed workers compensation policy for only the state of Florida. Three months before the present policy began, ABC opened a sales office in Georgia due to business volume growing in that state. ABC failed to report the new location and new state at policy inception. The manager of the Georgia office fell and was injured and missed work for three weeks after the inception of the ABC policy. The manager made claim for Georgia benefits. Which one of the following is true regarding ABC's coverage for Georgia benefits? ---------CORRECT ANSWER-----------------Coverage for this claim would not be covered by ABC's insurance. The claims-made trigger in a site specific environmental impairment liability policy differs in three ways from the trigger in other claims-made liability policies. Which one of the following best describes one of those three ways? ---------CORRECT ANSWER-----------------A site-specific environmental impairment liability policy typically does not have a retroactive date. The Grey Corporation has a Commercial General Liability Coverage Form with the following limits: Each Occurrence $1,000, Damage to rented premises $100,000 each occurrence Medical expense $5,000 any one person Personal and advertising injury $1,000,000 any one person or organization General aggregate limit $2,000, Product/completed operations aggregate limit $2,000, Assuming the policy is written on an occurrence basis, how much of the general aggregate limit, if any, remains if the following claims have been paid under the policy? a premises/operations liability claim of $600, a products liability claim of $1,200,
$3,000 of medical expenses to a customer injured on the premises. a personal and advertising injury liability claim of $300,000 --------- CORRECT ANSWER-----------------The general aggregate is reduced by any amounts paid under Coverages A, B, and C, except for those that arise out of products/completed operations. Therefore, the general aggregate limit is reduced by $600,000 + $3,000 + $300,000 = $903,000. This leaves $1,097,000 of the general aggregate limit remaining. An example of liability imposed by statute is ---------CORRECT ANSWER--- --------------Workers compensation. n July of 2010 the Dodd-Frank Act was passed in response to the public's demand for improvements in financial systems and to curb abusive Wall Street practices. A significant provision of the Dodd-Frank Act was the ------ ---CORRECT ANSWER-----------------Abolishment of the Troubled Asset Relief Program (TARP). The supplemental payments section of the Commercial General Liability coverage form is most correctly defined as ---------CORRECT ANSWER----- ------------The supplemental payments section of the Commercial General Liability coverage form is most correctly defined as specified costs the insurer will pay as part of any claim the insurer investigates or defends under Coverage A or B Excess liability policies ---------CORRECT ANSWER-----------------Do not provide coverage for exposures not covered in primary policies. Part Two of the Workers Compensation and Employers Liability Policy (WC&EL) is the employers liability portion of the policy. Under this portion
QRS, LLC has been a small town's largest employer for a long time. When the owner of QRS, LLC died, the company was forced to lay off 25 percent of its workforce, because the proper life insurance was not in force for the owner. These mass lay-offs resulted in bad publicity in the town paper and much negativity directed at the company in various town meetings. The employment practices liability (EPL) policy in force for QRS, LLC provided money to cover QRS's costs to retain a PR firm.Such costs are called ------- --CORRECT ANSWER-----------------Reputation management costs. Mitchell is a highway contractor whose company is covered with a workers compensation policy and an unendorsed Business Auto Coverage Form (BACF). Which one of the following losses would be covered by his business auto policy? ---------CORRECT ANSWER-----------------An employee runs over a subcontractor's equipment with an owned auto. Which one of the following statements is true about an excess policy? ------- --CORRECT ANSWER-----------------It provides coverage no broader than is provided by underlying polices. Although professional liability policies for financial and legal professionals contain many of the same provisions of those for other professionals, there are important differences. Which one of the following would be covered under the professional liability policies for financial and legal professionals that contain the broadest definition of professional services? --------- CORRECT ANSWER-----------------Claims arising from any professional service performed for others for a fee An excess liability insurance policy that covers a claim in excess of the underlying limits only if the loss is covered by the underlying policy is called ---------CORRECT ANSWER-----------------A following-form excess policy
A dealership keeps a customer's auto overnight. The auto, while on premises, is damaged by hail. The dealership has garagekeepers coverage on a legal liability basis on an Auto Dealers Coverage Form. The customer has a Liability-only policy. The customer asks the dealership to pay for the hail damage, but the claim is denied by the insurer. The only way the dealership's policy would have paid the claim is if the dealership had purchased ---------CORRECT ANSWER-----------------One of the garagekeepers direct coverage options. The Broad Form Products Coverage endorsement can be used --------- CORRECT ANSWER-----------------To delete the Auto Dealers Coverage Form (ADCF) exclusion for defective products. Cox Corporation recently had a covered personal liability judgment against it for $5 million. It has an underlying commercial general liability policy with a $1 million limit, which is the amount required by the umbrella insurer. The umbrella policy has a $10 million limit with a $10,000 SIR. How much is the ultimate net loss to the umbrella insurer? ---------CORRECT ANSWER------- ----------The ultimate net loss to the umbrella insurer is $4,000,000. The Supplementary Payments section of the Commercial General Liability (CGL) Coverage Form contains provisions concerning the insurer's duty to defend indemnitees of the insured, but only if specific conditions are met. Which one of the following is one of these conditions? ---------CORRECT ANSWER-----------------The indemnitee and the insured must ask the insurer to conduct and control the defense.
as an intentional tort? ---------CORRECT ANSWER-----------------A newspaper mistakenly identifies the driver in an alcohol-related hit and run accident as John Doe, a prominent local attorney. An employee, while working for the Brown Corporation, was negligent when lighting a cigarette and started a small fire that caused a fellow employee's clothes to catch fire. The injured employee suffered burns as well as the loss of clothes. To what extent, if any, does the corporation's Commercial General Liability Coverage Form provide coverage for the negligent employee if he is sued by the injured employee? --------- CORRECT ANSWER-----------------There is no coverage for the negligent employee because he is not an insured under the policy for bodily injury to a co-employee or damage to such an employee's property Adam is an executive at Blithe Manufacturing (Blithe). He drives a car that is owned by Blithe and insured under the company's Business Auto Coverage Form (BACF). Adam is permitted to drive the vehicle for both business and personal use. One Sunday morning, Adam is driving the car on a highway when he is struck by another vehicle and pushed into the guardrail. The car that struck Adam did not stop, but several other people who witnessed the accident did stop. They all confirmed that Adam was struck by another reckless driver who never stopped. Adam was seriously injured and car was totaled. Which one of the following endorsements to Blithe's BACF would best cover Adam's significant medical expenses and the damage to the vehicle? ---------CORRECT ANSWER-----------------The Uninsured Motorists Coverage endorsement (UM) would best cover Adam's medical expenses and the damage to the vehicle, because it was an owned vehicle involved in a hit and run accident. Adam's injuries are significant and because the accident occurred on a Sunday it would not be covered by workers compensation. A claim representative is handling a claim for an auto dealership insured under the Auto Dealers Coverage Form (ADCF). Several new autos and autos left for service by customers were damaged when a fire started in the
service building. The representative has verified that the loss occurred to the named insured at an insured location during the policy period; that Sections I and II of the ADCF apply to the losses and that the autos qualify as covered autos. The next step that the representative should take in determining whether coverage applies is to ---------CORRECT ANSWER---- -------------Review the policy conditions to determine whether they preclude coverage at the time of loss. John is a painting contractor. He has just been hired to complete a job for Bill's company building. John, in his painting contract, agreed to indemnify Bill for any bodily injury or property damage made against him if it has any connection with his work on Bill's premises. While the job was being performed, one of John's employees was badly injured at the premises site and Bill was responsible. As a result, the employee filed a negligence claim on Bill because he thought he would recover damages in a tort suit that would be greater than worker's compensation benefits. Is the employee allowed to file a claim against Bill under Worker's Compensation laws? And if so, who is legally obligated to pay the claims? A. Yes, the employee is allowed to file a negligence claim because worker's compensation laws do NOT prohibit such actions. Bill would be legally obligated to pay claims because he was responsible for the injury. -- -------CORRECT ANSWER-----------------Answer: A - John must indemnify Bill for the damages resulting from the employee's suit because of the contract. And under worker's compensation laws, a covered employee is not prohibited from suing people other than their employers for occupational injuries or diseases. In one of the discussion board post we were assigned to read and watch a video on two different liability occurrences. One being the tiger attack at the San Francisco Zoo and the other being the alligator attack at Disney. Which of the following is a TRUE statement about the occurrences? A) Because the boys were taunting and harassing the tiger the San Francisco was not held liable for the boys actions B) Disney showed negligence and were held under strict liability C) Although Disney showed negligence they were not held under strict liability
This provision is only applicable if due to a single fire caused by the tenant renting the space. I, II, and III I and III II and III III only ---------CORRECT ANSWER-----------------Answer: C. II and III Which of the Following is Not True for Medical Payment under the CGL? A. Medical Payments require the insured to be legally liable, making it Liability insurance B. To be covered medical expenses must be result of bodily injury because of an accident on the Insured's premises or arising from the insured operations C. Medical Payments have a much lower limit than either Coverage A or Coverage B D. All of the Above are Not True ---------CORRECT ANSWER----------------- The correct answer is A because Medical Payments do not require the insured to be legally liable and therefore is not technically liability insurance. The rest of the answers are True A. Civil law is a classification of law that applies to legal matters governed by criminal law and that protects rights and provides remedies for breaches of duties owed to others. B. Liability insurance responds to liability imposed by both civil law and criminal law. C. Oftentimes, a single act cannot constitute both a civil wrong and a crime. D. The criminal law is punishable by imprisonment and fines, while the civil law is punishable by money and injunctions. ---------CORRECT ANSWER--- --------------Explanations: A. Civil law is a classification of law that applies to legal matters NOT governed by criminal law and that protects rights and provides remedies for breaches of duties owed to others.
Which of the following is NOT part of the Conditions imposed on the insurer's duty to pay damages under CGL Coverage A? A. The bodily injury or property damage must not be known to the named insured or certain other persons before the policy period. B. The policy must apply to the bodily injury or property damage. C. Infringing upon another's copyright, trade dress* or slogan in your advertising. D. The damages must result from bodily injury or property damage as defined in the policy. ---------CORRECT ANSWER-----------------C. Infringing upon another's copyright, trade dress* or slogan in your advertising. Which of the following is NOT an essential element in determining if a party was negligent? A. Breach of Duty B. Duty of Care C. Severity of Injury D. Injury/Damage E. Causal Connection of Prudent Factors F. All of the Above ---------CORRECT ANSWER-----------------Answer: C, when simply determining if a party was negligent the severity of the injury does not factor in. A party can be determined negligent for a cut finger or a death all the same. A major corporation is deciding to diversify their business and has acquired a LLC to help them do this. When corporation acquired the LLC they wanted to see if the LLC became an insured under their current policy. In an unendorsed CGL policy does the LLC become an Insured? A. The LLC is insured under the corporation's policy for 90 days after acquisition because it is new to the company B. Since the LLC is joining a corporation The Newly Acquired Organizations provision extends to the LLC C. The LLC is not able to be an Insured since it is not named in the policy. D. The LLC is an insured until the end of the policy period after acquisition since it is diversifying the company ---------CORRECT ANSWER--------------- --Answer: C
